In 2015, the Court of Justice of the European Union (CJEU, Court) delivered a judgment in CDC v. Akzo Nobel finding that broadly worded jurisdiction clauses do not extend to competition-related tortious damages claims. Even though the Court did not address arbitration clauses, a spillover into this area may nonetheless take place. This is reflected in how, both prior to and after the CDC judgment, Member States’ courts have reached conflicting conclusions when dealing with broad arbitration clauses.
This article, which can be found here, reviews these developments as follows:
The introduction reviews the relationship between arbitration and private competition enforcement in the EU.
The arbitrability of competition law issues is now generally acknowledged in the EU. Nowadays, arbitral tribunals do not even discuss the issue of antitrust arbitrability in their awards. Academic commentators focus on discussing whether certain contractual formulas amount to valid consent to arbitrating EU competition law matters.
Arbitral tribunals are able to deal with matters such as claims for damages or finding that a contract is null and void for breach of competition law. They may not, however, interfere with the exclusive power of national courts and competition authorities to take decisions of administrative or criminal nature, e.g. imposing fines or criminal sanctions for antitrust violations. There is also an implied obligation on arbitral tribunals to apply EU competition law ex officio, since otherwise an arbitral award may be subject to the risk of setting aside or non-enforcement for violation of public policy.
A second section describes the CDC v Akzo Nobel judgment.
This was a preliminary reference from a Dortmund court regarding the interplay between EU competition law and jurisdiction rules within the Brussels I Regulation. Cartel Damage Claims (CDC) is a special purpose vehicle that purchased claims from undertakings that alleged to have suffered losses from the hydrogen peroxide cartel in 1994–2000, and then aggregated those claims and sought to bring a unified damages claim. Some of the contracts of sale that underpinned individual damages claims included jurisdiction and arbitration clauses. Broadly speaking, the national court asked the ECJ whether this single unified claim should be allowed even as regards contracts that included jurisdiction and arbitration clauses – i.e. whether Member States’ courts are allowed to disregard jurisdiction and arbitration clauses in order to allow the effective enforcement of EU competition law.
The ECJ limited its answer to jurisdiction clauses. According to settled case law, it is for the national courts to interpret jurisdiction clauses and determine which disputes fall within their scope. However, in this case the ECJ went further and provided its own interpretation of a broadly worded jurisdiction clause. In the Court’s opinion: ‘a clause which abstractly refers to all disputes arising from contractual relationships [does not extend] to a dispute relating to the tortious liability that one party allegedly incurred as a result of the other’s participation in an unlawful cartel.’ The CJEU concluded that damages claims related to a cartel do not stem from the contractual relationship between the parties because ‘the undertaking which suffered the loss could not reasonably foresee such litigation at the time that it agreed to the jurisdiction clause [and] had no knowledge of the unlawful cartel at that time.’
The author considers that this decision gives rise to significant uncertainty. In particular, how far does the ‘reasonable foreseeability’ test extend? Would it be possible to argue that other tortious claims should also be foreseeable to be covered by a dispute resolution clause? After all, the lack of knowledge about a committed tort is not only true for competition law infringements, but also for other torts, e.g. when fraud is committed during the conclusion of a contract, which is not known to the affected party. In extremis, would it be possible to argue that contractual claims should also be foreseeable to be covered by a dispute resolution clause? Lack of knowledge could, for instance, refer to the very basis of contractual claims related to non-disclosure of information relevant to the conclusion of the contract. Such broad interpretation would arguably render dispute resolution clauses meaningless for many standard claims.
A third section focuses on the applicability of the CDC v Akzo Nobel judgment to arbitration clauses.
Even though the CJEU did not comment on arbitration agreements, the judgment has influenced the way national courts interpret them. This is due to the fact that the interpretation of the wording of dispute resolution clauses follows generic principles of contractual construction and interpretation. It follows that the same words may be interpreted in the same manner, regardless of whether they appear in a jurisdiction or an arbitration agreement. The effects of the CDC v Akzo Nobel judgment may therefore extend to the established practice of catching tort-related disputes with broadly worded arbitration agreements.
The author discusses a number of judgments related to various CDC claims which followed CDC v Akzo Nobel as regards arbitration clauses. These decisions typically held that there is no reason to take different approaches to jurisdiction and arbitration clauses and that cartel damages cannot be said to be reasonably foreseeable when agreeing to arbitrate disputes related to a contract.
On the other hand, an English court stood by pre-existing principles of construction of arbitration clauses in Microsoft Mobile Oy (Ltd) v. Sony Europe Ltd., reaffirming English law to the effect that tort claims which could be brought in parallel to contractual claims are covered by a broadly worded arbitration agreement. Similarly, the same Dortmund court that made the reference in CDC v Akzo Nobel found that antitrust damages claims are closely connected to the contractual relationship between the parties. The conclusion of the contract, as well as its execution, are influenced by the cartel, and the contract also creates the opportunity for the cartel to have damaging effects in the first place. The Dortmund court therefore recognised the established interpretation of arbitration clauses as catching parallel tortious claims.
A fourth section considers possible reactions to the CDC v Akzo Nobel decision
Several problems may flow from the CJEU’s ruling in CDC v. Akzo Nobel if it is interpreted broadly. First, other EU jurisdictions may follow the approach of Dutch and Finnish courts extending the requirement of foreseeability to antitrust damages claims under arbitration agreements. Second, due to the unclear scope of the CJEU’s judgment, the requirement of foreseeability could potentially extend to all tortious claims, or even to contractual claims that were not foreseeable at the time of the contract was entered into. As such, the paper concludes with recommended drafting for arbitration clauses to ensure that such clauses encompass competition claims, and a recommendation to select jurisdictions which recognise broadly worded arbitration clauses to include any potential antitrust claims – such as England (subject to Brexit) or Germany.
While this has the typical pro-arbitration bias that I have come to expect from virtually all papers on arbitration – they are written mainly by arbitration practitioners, after all – this is a solid paper describing the main EU and national cases on the interpretation of arbitration and jurisdiction clauses as concerns competition claims.
As I noted in a post of 24 March 2017, and in another post in December 2017, this reflects a change from the old battlefield between proponents and opponents of the arbitrability of competition matters to a new frontline fought over how to construe arbitration clauses. It is also remarkable that all these articles focus on the same case – CDC v Akzo Nobel. This takes me to a small issue I have with this paper: while it provides a thorough, professional overview of the issue, it fails to engage with other academic work on the topic.